Scandal enveloped Silvio Berlusconi anew Thursday after a businessman linked to a 2009 prostitution case was arrested on suspicion of extorting hundreds of thousands of euros from the Italian prime minister.

Giampaolo Tarantini, an entrepreneur from the southern city of Bari, and his wife Angela Devenuto were arrested after payments from Berlusconi totalling as much as half a million euros were uncovered by investigators, prosecutors said.

A warrant was also issued for another man, Valter Lavitola, who prosecutors said was a consultant linked to defence and aerospace group Finmeccanica.

The arrests return the spotlight to a prostitution scandal which dominated headlines in 2009 when Patrizia D'Addario, an escort connected with Tarantini, claimed to have been paid to attend parties at Berlusconi's private residence in Rome.

They come at a time when Berlusconi's centre-right government is struggling to tie up a revised 45.5 billion euro (40 billion pound) austerity package designed to reassure anxious markets about the solidity of Italy's strained public finances.

Naples prosecutors said that the three arrests had been made after extensive investigations that included wiretap evidence.

Serious and consistent indications were found of repeated payments to the Tarantini couple of sums in cash and other benefits of a financial nature by Silvio Berlusconi, the Naples prosecutors' office said in statement.

The payments used hidden or at least untransparent means and involved the intervention of Lavitola, it added.

RUBY AFFAIR UNRELATED

The latest case is unrelated to the so-called Ruby affair in which Berlusconi is on trial in Milan accused of paying for sex with teenaged nightclub dancer Karima El Mahroug, known as Ruby Heartstealer, when she was a minor.

However, it highlights the scandals still hanging over the government as it battles to prevent Italy being dragged back into the centre of the euro zone debt crisis.

Berlusconi, who was expected to attend a summit on Libya in Paris Thursday, has made no comment and he was not present at a cabinet meeting in the morning.

Prosecutors said Tarantini and Lavitola, who appeared to have kept part of the money paid into front companies for himself, had acted together to constrain Berlusconi to make further payments.

No comment was immediately available from lawyers acting for either of the two.

Tarantini, who was closely involved in the D'Addario affair, is being investigated separately over allegations that he provided paid escorts to curry political favours.

The current investigation is focussed on suspicions that Tarantini lied to investigators when he told them repeatedly that Berlusconi was unaware that women brought to parties at his residences were prostitutes, Italian media said.

Berlusconi has denied the payments to Tarantini were the result of extortion. He told Panorama magazine last week when the investigation was launched that he had simply been helping Tarantini.

I helped a person and a family with children who were in very serious financial difficulties, he told the magazine, part of his own media empire. I did nothing illicit, I was only helping a desperate man without asking anything in exchange.